Texas uninsured and underinsured motorist coverage

Uninsured/underinsured motorist coverage protects an insured when another driver is legally responsible for an accident but has no applicable liability insurance or not enough insurance to cover the damages. Texas law requires insurers to offer UM/UIM with an automobile liability policy. The coverage can address bodily injury and property damage, but the person must be an insured, the other vehicle must meet the policy’s UM/UIM definition, and the insured must be legally entitled to recover damages. Limits, offsets, deductibles, exclusions, and claim procedures still apply.

UM and UIM are often written together but describe different situations. “Uninsured” generally means the responsible vehicle has no applicable liability coverage or falls into a policy-defined uninsured category. “Underinsured” means there is liability insurance, but its available limits are lower than the limit of the injured insured’s UIM coverage. In either case, the coverage is not a no-fault benefit: it is tied to another party’s legal responsibility and the insured’s covered damages.

Texas requires an offer, not an unchangeable purchase

Texas Insurance Code §1952.101 requires an insurer issuing an automobile liability policy to provide UM/UIM coverage in the policy or as supplemental coverage. The statute also allows a named insured to reject the coverage in writing. TDI tells consumers that companies must offer UM/UIM when auto insurance is purchased and that a person who does not want it must turn it down in writing. This is why UM/UIM is commonly described as coverage that is offered by default unless rejected, rather than a coverage every policyholder must keep regardless of choice.

Section 1952.101 also addresses renewals and reinstatements. If the named insured previously rejected UM/UIM in connection with that policy or a policy from the same or an affiliated insurer, the insurer generally is not required to add the coverage to a renewal or reinstated policy unless the named insured requests it in writing. For exam purposes, remember both parts of the rule: written rejection can decline coverage, and a prior written rejection can affect later renewals with the same or affiliated company.

UM/UIM limits are tied to the liability limits the insured selected. Under §1952.105, bodily-injury limits must be offered in amounts the insured desires up to the policy’s bodily-injury liability limits; property-damage coverage must be offered up to the property-damage liability limits and is subject to a $250 deductible. Statutory minimum limits also apply. The practical lesson is that UM/UIM is not an unlimited second liability policy; the declarations and statutory rules set its maximum.

What makes a vehicle uninsured or underinsured?

Texas Insurance Code §1952.102 treats an insured motor vehicle as uninsured when the insurer providing liability coverage is unable, because of insolvency, to pay the insured’s legal liability within its policy limits. The statute allows the policy definition of uninsured motor vehicle to address certain additional situations, subject to law and approved policy wording. The correct answer in a particular claim therefore depends on both the statute and the policy definition.

Under §1952.103, an underinsured motor vehicle has collectible liability insurance, but the available limits for the owner or operator are lower than the UIM limit in the injured insured’s policy. Limits can also be reduced by payments to other claimants from the same accident. A driver does not become underinsured merely because the insured’s bills are large or because the driver’s insurer disputes fault. The comparison is between covered liability limits available from the at-fault vehicle and the insured’s UIM limit, together with the actual amount of legally recoverable damages.

Example: A person has $100,000 in legally recoverable covered damages. The at-fault driver has $30,000 of available liability insurance, and the injured person has a $100,000 UIM limit. In broad terms, UIM may address the unpaid covered amount after crediting the amount recovered or recoverable from the responsible driver’s insurer. The statute does not allow the insured to collect $30,000 from the other insurer and then automatically receive another $100,000 from UIM. The UIM policy limit is a ceiling, and amounts recovered from the at-fault driver reduce the UIM obligation.

The precise settlement calculation can depend on multiple injured claimants, per-person and per-accident limits, exhaustion or reduction of the tortfeasor’s policy, the damages proved, and the UM/UIM contract. A policy limit does not establish the value of the claim, and the other driver’s limits do not prove liability. The claim needs evidence of fault, causation, and damages.

Bodily-injury UM/UIM

UM/UIM bodily-injury coverage concerns damages for bodily injury, sickness, disease, or death that an insured is legally entitled to recover from an uninsured or underinsured motorist. The Texas statute’s definition expressly includes these types of damages. Depending on the policy and applicable law, recoverable damages may include medical expenses, lost income, physical impairment, and pain and suffering. The insured must establish the relevant injury and legal responsibility; the fact that an uninsured driver was involved does not by itself prove the value of a claim.

UM/UIM bodily injury is different from Personal Injury Protection (PIP) and medical payments coverage. PIP and MedPay can pay certain medical expenses under their own terms without first establishing that another driver was legally at fault. UM/UIM instead depends on the insured’s legal entitlement to recover from the uninsured or underinsured party. A person may have more than one potentially relevant coverage, but each has separate triggers, limits, coordination rules, and documentation requirements.

Texas courts have explained that the phrase “legally entitled to recover” matters. The Texas Supreme Court’s Brainard decision describes UIM benefits as requiring a determination of the other motorist’s liability and underinsured status, and its later cases continue to apply that framework. For a study article, the key point is that UIM is not necessarily paid immediately when the insured reports a crash or submits medical bills. Liability, damages, and whether the other driver is underinsured may need to be established under the policy and governing law. Claim and litigation procedure is beyond a simple coverage label, so do not promise that a settlement offer alone triggers payment.

The insured also must be an “insured” under the applicable UM/UIM provisions. The policy may define insured persons to include the named insured, resident family members, and certain occupants or users of a covered auto. The scope can differ by form and coverage part. When reading a fact pattern, identify whether the claimant was occupying a covered auto, was a named insured, was a household member, or was otherwise covered under the policy’s UM/UIM definition.

Property-damage UM/UIM

UM/UIM property-damage coverage can pay for covered damage to an insured auto or other covered property when an uninsured or underinsured motorist is legally responsible. TDI lists vehicle repairs, property in the car, rental expenses, and diminished value among potential UM/UIM benefits, subject to the policy. The coverage is not the same as collision: collision generally addresses covered damage to the insured auto from a collision regardless of whether the other driver is uninsured, while UM/UIM property damage depends on an uninsured or underinsured motorist and the insured’s entitlement to recover.

Texas law sets a $250 deductible for the UM/UIM property-damage coverage that must be offered. The deductible applies to property damage, not as a universal fee for every UM/UIM bodily-injury claim. TDI’s consumer guidance also describes UM/UIM coverage as having a deductible and notes that collision may have a different deductible. Check the declarations and policy form for the selected coverages and actual deductible treatment.

Texas Insurance Code §1952.107 coordinates collision and UM/UIM property-damage coverage. An insured who has both may choose which one to use. If neither alone is enough to pay all damage from one occurrence, the insured may use both, designate one as primary, and exhaust the primary coverage before recovering under the secondary coverage. The insured pays the primary deductible. If the secondary deductible is no more than the primary deductible, the law does not require an additional secondary deductible; if it is higher, the insured pays the difference. Recovery under both cannot exceed actual damages.

Hit-and-run claims and physical contact

A hit-and-run may qualify for UM protection when the responsible vehicle cannot be identified, but Texas law includes a specific condition for an unknown vehicle. Insurance Code §1952.104 requires the coverage form to require actual physical contact between the unknown person’s vehicle and the insured’s vehicle or the insured’s person or property before the insured can recover under UM coverage. This is a frequent exam issue.

Example: An unidentified car directly strikes a covered vehicle and leaves. The physical-contact condition may be satisfied, though other questions remain about insured status, proof of the event, fault, damages, exclusions, and limits. If the unidentified car swerves nearby and causes the insured to crash without touching the insured or their property, the statutory physical-contact requirement for an unknown vehicle may prevent UM recovery. Do not turn this rule into a statement that every UM accident always requires contact; the cited statutory condition addresses an unknown motor vehicle, and the facts and policy matter.

Property damage from a falling object or an unknown vehicle also must be connected to a qualifying uninsured motor vehicle under the policy. Collision coverage may be an alternative path for damage to the insured auto even when UM coverage is unavailable. A contact requirement question is about the statutory unknown-driver UM provision, not a general definition of all collision losses.

UM/UIM and liability insurance are not interchangeable

Auto liability protects an insured when that insured becomes legally liable to someone else. UM/UIM is designed to protect the insured against damages caused by another driver who is uninsured or underinsured. The direction of protection is reversed: liability pays others for the insured’s covered responsibility; UM/UIM may pay the insured for a qualifying loss caused by someone else.

UM/UIM is also separate from PIP, MedPay, collision, and comprehensive coverage. PIP and MedPay focus on injury-related expenses under no-fault terms. Collision covers qualifying impact damage to the insured auto. Comprehensive (other-than-collision) addresses specified non-collision causes such as theft, hail, or fire. UM/UIM may overlap factually with these protections after a crash, but each responds to a different policy trigger.

Do not assume that buying UM/UIM means the insured can recover twice for the same loss. Statutory aggregate-limit language prevents stacking the limit merely because there are multiple insureds, applicable policies or bonds, vehicles, or claims for the same occurrence. UIM payments must account for amounts recovered or recoverable from the underinsured driver’s insurer. Property damage paid under both collision and UM/UIM cannot exceed the actual damage.

Limits, offsets, and multiple claimants

The declarations page states the UM/UIM limits purchased. Bodily-injury limits may be shown in split-limit form, such as a per-person amount and a per-accident amount. Property-damage limits apply separately as the policy provides. The maximum stated amount is not automatically payable: it caps covered damages after liability, causation, offsets, deductibles, and other contract terms are considered.

Suppose two injured people make claims after one crash and the responsible driver’s small liability policy is reduced by payments to other claimants. The available liability amount may affect whether and to what extent the driver is underinsured. The insured’s per-person and per-accident UIM limits still apply, and Texas law bars multiplying aggregate recovery simply by counting multiple insureds, vehicles, or claims. Read the limit wording rather than adding every number appearing in the declarations.

A liability insurer’s limits and a UIM insurer’s limits answer different questions. The other driver’s limits show how much coverage may be available from that driver’s insurer. The insured’s UIM limits set an upper boundary for the insured’s own contract protection. The amount recovered under UIM can be reduced by amounts recovered or recoverable from the at-fault driver’s insurer under §1952.106. Whether a recovery is actually available, and how claims by multiple people affect it, depends on the facts, policy, and applicable law.

Claim steps and coordination

When an accident may involve UM/UIM, prompt notice and preserving evidence are practical parts of the claim. The policy may require notice, cooperation, documentation, and consent before certain actions. Police reports, photos, witness details, vehicle information, repair estimates, medical records, and proof of lost income can help establish what happened and what damages resulted. The exact requirements come from the policy and applicable law.

Do not assume that the other driver’s insurer can settle every issue without affecting a UIM claim. A release can extinguish claims against the at-fault driver, while the insured’s own UM/UIM policy may contain cooperation or consent-to-settle provisions. Texas courts have considered the relationship between liability settlements, consent, and later UIM claims. The safe exam principle is to distinguish settlement with the tortfeasor from the separate UM/UIM claim and follow the specific policy procedure; do not release rights or promise an outcome based on a generic rule.

For vehicle damage, compare the UM/UIM property-damage and collision routes under §1952.107. If using both is necessary to cover the full damage, identify the primary coverage, apply its deductible, exhaust it first, and then consider the secondary coverage and deductible adjustment. The total payment cannot exceed actual damages. The insured’s own insurer may have recovery rights against responsible parties after making a payment, subject to the policy and statute.

Health coverage, PIP, and MedPay may also contribute to medical expenses. Coordination among those payments can involve separate policy provisions, lien or reimbursement rules, and statutory requirements. For exam questions, first identify what each coverage pays for, then apply the particular offset or coordination rule supplied by the question. Avoid assuming that every medical expense can be collected in full under every available policy.

Texas UM/UIM exam traps

• Calling UM/UIM mandatory for every insured in the same way as liability. The insurer must offer it; the named insured may reject it in writing.
• Saying a verbal rejection is enough. Texas law and TDI describe rejection in writing.
• Treating an underinsured driver as uninsured. A UIM vehicle has collectible liability coverage that is insufficient relative to the insured’s UIM limit.
• Adding the tortfeasor’s liability limit on top of the UIM limit without an offset. UIM recovery is reduced by amounts recovered or recoverable from the underinsured driver’s insurer.
• Assuming the UIM limit is automatically payable whenever the other driver’s policy is exhausted. Fault, legal damages, insured status, UIM status, limits, and conditions still have to be established.
• Applying the $250 deductible to every UM/UIM bodily-injury claim. Section 1952.105 ties that deductible to property-damage coverage.
• Forgetting the physical-contact rule for an unknown hit-and-run vehicle. Section 1952.104 requires actual contact with the insured vehicle, person, or property for UM recovery in that situation.
• Assuming collision and UM/UIM property damage cannot both be used. Section 1952.107 permits both when neither alone is enough, with primary/secondary and deductible rules.
• Stacking limits because several insureds or vehicles appear in the accident. Section 1952.104 imposes aggregate-limit constraints.
• Confusing UM/UIM with PIP or MedPay. UM/UIM depends on legal responsibility of an uninsured or underinsured motorist; PIP and MedPay follow their own coverage triggers.

Short worked examples

A reliable analysis sequence

1. Identify the kind of loss: bodily injury, property damage, or both.
2. Confirm the claimant is an insured under the UM/UIM section of the policy.
3. Determine whether the responsible vehicle is uninsured or underinsured under statute and policy definitions.
4. Establish the insured’s legal entitlement to recover: fault, causation, and covered damages.
5. For an unknown hit-and-run driver, check the actual-physical-contact requirement.
6. Read the declarations for UM/UIM bodily-injury and property-damage limits, then apply statutory deductible, offsets, aggregate limits, and any collision coordination.
7. Check notice, cooperation, consent, exclusions, and settlement conditions in the policy.

Quick recap

• Texas insurers must offer UM/UIM with auto liability insurance; the named insured can reject it in writing.
• UM/UIM can cover bodily injury and property damage the insured is legally entitled to recover from an uninsured or underinsured motorist.
• UIM concerns an at-fault vehicle with collectible but insufficient liability insurance; amounts recovered or recoverable from that insurer reduce UIM recovery.
• Texas law sets a $250 deductible for UM/UIM property damage and limits offered coverage in relation to the insured’s liability limits.
• An unknown hit-and-run vehicle requires actual physical contact with the insured’s vehicle, person, or property under §1952.104.
• Collision and UM/UIM property-damage coverage can coordinate under §1952.107, including primary coverage and deductible rules.
• Coverage depends on the policy’s definitions, limits, exclusions, and claim conditions; UM/UIM is not automatic no-fault compensation.

Prepare for the Texas P&C exam

For exam questions, start by identifying who caused the loss and whether that driver is uninsured or underinsured. Then separate bodily injury from property damage and apply the correct limit, deductible, offset, and coordination rule. Sitonce’s Texas Property and Casualty exam prep includes personal auto coverage lessons and practice questions for Texas insurance rules.